2 Stocks To Trade, And What's Next For The Market

By The Oxen Group: Market Recap: The market turned things around on Wednesday on the back of Apple (AAPL) earnings. Wow! Apple sold 35M iPhones in Q1 ... 35M. That's a lot of phones! The stock rocketed back after faltering into earnings, and it led the tech industry, Nasdaq and market higher. Additionally, European markets were strong as Spanish bond yields continued to drop and European earnings were fairly strong. One surprisingly good report was from BBVA (BBVA), which helped power the financial industry higher. Finally, the market got a seemingly more doveish Ben Bernanke in the latest report as well as continued talk about a gradual improvement in the economy. We have continued to take a neutral approach on the market, and we believe that two signs of why that is important is durable goods and crude inventories. Durable goods dropped 4.2% vs. 1.5% expectations. Additionally, crude inventories were higher again, showing yetComplete Story »

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Welcome to the elevator to hell, buddy.
Thursday, the S&P 500 tumbled to close lower for the fifth day in a row. And it could keep going. Wanna get out? Too bad. All the other buttons are busted. I hope you like hot weather.

First, stocks hit new highs on Friday. Gold lost $22 per ounce.
But believe it or not, our new Trade of the Decade is going well.
As you may recall, we began a “Trade of the Decade” back at the start of the 21st century.
“Buy gold. Sell stocks.” That was it. No fancy straddles, hedges or derivatives. Not even any stock selection. Just a simple macro trade that you could stick with for the next 10 years.
How did it turn out? Beautifully. Gold was the top performing asset class of that period from 2000-2010.

Today saw a massive short covering trade occur in the US Treasury market. A broad base of traders got short treasuries over the past few days (long end auction setup trades...and the usual group who just MUST fade every move). Yesterdays weak ADP and ISM data brought in a large buyer of bonds (and a medium size seller of stocks). Today the stocks market went sideways while the Treasury market was rocked...the herd of Treasury shorts was caught and fear overtook all rational thought. There was a very high volume short covering event in the morning t

Overnight, just as Japan was threatening to roll risk over even more (at the end of the day, or rather night, it did, sliding over 200 point bringing the two day total plunge to nearly 800 points) China reported trade numbers which were "better than expected" even though the net GDP contribution from the overall surplus was actually less than expected at $17.8 vs $27.1, which in turn pushed US futures solidly into the green.

While many of the newer social media stocks struggle for gains this year, old-school tech stocks have become some of the best trades on the market.
With the rare exception (Facebook is doing well—shares are up 26% year-to-date) the social stocks are in the gutter. They got off to a fast start in January and February, but ran out of steam in the spring. Aside from a few feeble attempts, few have posted anything close to a noteworthy comeback. Twitter, LinkedIn, and Groupon are all down double-digits year-to-date. Groupon—the worst performer on this short list—is down 47%.

By engaging in QE, the Fed alters the very structure of risk in the financial system. Traders on Wall Street, knowing full well that the Fed would be soaking up Treasuries, rushed into new debt issuance with the intention of flipping over these assets to the Fed in the near future. This became a self-fulfilling prophecy as the “front-running the Fed” trade became a dominant theme for Wall Street. By piling into bonds, traders forced prices higher and yields lower: precisely what the Fed wanted.